Our partner, XM, lets you access a free demo account to apply your knowledge.
No hidden costs, no tricks.
Cryptocurrencies have become popular assets to invest in for all sorts of investors. There are individual retail investors who are looking to make huge profits, as well as big corporations who are setting up whole crypto funds.
But cryptocurrencies are known for their volatility. This defining feature of cryptos can make investors huge profits really fast, but there is also a possibility of losing huge investments in a matter of days or even hours. Because of this, experienced investors started suggesting people invest in crypto ETFs. Why should your investment be dependent on the success of one crypto when you can diversify your portfolio by owning a basket of cryptocurrencies?
“ETFs aren’t just having a moment. They’re creating a movement.” – Martin Small
Cryptocurrency ETFs are investment funds that can be bought similarly to stocks and mutual funds. This is the easiest way to diversify your portfolio and minimize the risks associated with crypto investing. Most crypto ETFs invest in different cryptocurrencies and content which is associated with their development.
“ETF portfolios will be the inevitable default for investors in the years to come because they are lower cost, more transparent and offer greater liquidity and tax advantages than mutual funds.” – Jon Stein
Cryptocurrency ETFs that directly invest in cryptocurrencies are limited, and they mostly invest in companies associated with crypto, and some invest in crypto futures. We just need to select which ETF seems more interesting and has a more promising portfolio. Once we find the ETF that interests us, we just invest in it and wait for returns.
Amplify Transformational Data Sharing, as of June 2022, has $955 million in assets under management. This is one of the biggest ETFs which has cryptocurrencies and digital assets in its funds. This ETF does not directly invest in cryptocurrencies, but it is still one of the best choices to search for the crypto industry ETFs which are good for investing in. Their expense ratio is 0.71%.
Amplify Transformational Data Sharing ETF was launched in 2018 and currently contains 47 company stocks in its portfolio. This ETF holds stocks of the company such as crypto exchange Coinbase Global and Nvidia, which is the leading provider of GPUs, which are used for crypto mining.
This ETF also has a connection with Bitcoin, as it holds stocks of the crypto mining companies Hut 8 Mining and HIVE Blockchain Technology. Since Bitcoin price changes affect the stock prices of these companies, you will be indirectly investing in Bitcoin.
ProShares Bitcoin Strategy ETF is the first US Bitcoin-linked ETF. We can also call this fund Bitcoin futures ETF. After launching in 2021, this ETF became one of the most traded ETFs in the market and generated around $1 billion in asset management value.
This ETF does not invest directly in Bitcoin. Instead, it provides Bitcoin futures contract exposure. These Bitcoin futures have the shortest time of maturity and are settled in cash.
This fund offers monthly distributions and tracks the price of Bitcoin. We can comfortably call it one of the most actively-managed funds. The expense ratio for this fund is 0.95%. What this means is that you will be paying 0.95% of your investment every year as a fee for their services. This fund sometimes also invests in repurchase agreements and sometimes uses leverage.
Siren Nasdaq NexGen Economy ETF mostly invests in companies that develop and utilize blockchain technologies. This investment strategy is similar to the aforementioned Amplify ETF, but the assets they manage are far smaller. It also has a slightly different take when it comes to investing in this space.
Siren Nasdaq NexGen Economy ETF has 64 stocks in its portfolio. They usually focus on a broad spectrum of companies that might have crypto or blockchain segments. Their portfolio includes companies such as IBM, American Express, and Visa. All of these companies have started to show interest in crypto and blockchain products. If you want to invest in a crypto ETF but have some fears that a crypto crash might happen, investing in this ETF is one of the safest options, as these companies are nowhere near dependent on crypto and blockchain development. So even if crypto prices crash you will most likely be safe from suffering losses. Their annual expense ratio is 0.68%.
Established in late November 2021, Fidelity Advantage Bitcoin ETF was created after the SEC gave the green light for Bitcoin ETFs. Fidelity has been offering strong and secure packages for decades and wanted to implement Bitcoin in its services as well.
When we invest in Fidelity Advantage Bitcoin ETF we are investing and owning physical Bitcoin. You can easily diversify your portfolio as this fund has a low correlation to bonds, stock, and cash. This fund also has one of the lowest expense ratios, as you have to pay an annual fee of just 0.4%.
Just like most crypto ETFs, Global X Blockchain & Bitcoin Strategy ETF was established in November 2021. This fund is similar to the Global X Blockchain Strategy ETF, as they share 46% of the assets. The other 54% of their portfolio consists of Bitcoin futures.
Futures are a way to mimic asset value moves throughout the day. But futures contracts need to be rolled over every month, which means that they might underperform Bitcoin's price moves in the long run. This is a common problem that other funds, which hold Bitcoin, also experienced. Because of this, just half of the assets in these funds are allocated for Bitcoin while the remaining assets are stocks of companies that focus on blockchain development. Their expense ratio is 0.65%.
Launched in May 2021, Bitwise Crypto Industry Innovators ETF does not hold many assets. In their portfolio, they have just 30 stocks. These holdings mostly focus on companies that are innovators and pioneers in the crypto market. Because of this close relationship with cryptos, it is likely that it will somewhat follow the volatility of the crypto market.
Most of the assets in this fund are stocks of Bitcoin mining companies and companies which work with Bitcoin. They have stocks of companies such as Coinbase, Silvergate Capital, and MicroStrategy. Just like many other ETFs, this is still too early to predict if it is 100% worth investing in this ETF or not. Their expense ratio is 0.85%.
Vanguard does believe in blockchain and its developments, but they don’t see cryptos as more than hugely speculative assets. Because of this, they announced that they won’t be letting customers invest their funds in cryptocurrencies.
There are no pure Bitcoin ETFs just yet. But there are ETFs that let investors invest in Bitcoin indirectly, Global X Blockchain & Bitcoin Strategy ETF being one of them.
ETFs are really good investment opportunities for crypto investors. Cryptocurrencies are highly volatile, and because of this, traders need to diversify their portfolios. Diversifying your portfolio is easily done through crypto ETFs.